Cus - valuation - purpose of appointing distributor is to sell goods
within specified territory, therefore, there will not be any sales to
unrelated buyers - unrelated importers were getting 35% discount earlier
- It, therefore, follows that after appointment of distributor, he
would also eligible for same discount: CESTAT
MUMBAI, JULY 09, 2013: THE appellant are importers of office automation equipment from M/s Autonics Corporation, Korea. Since both the supplier and importer are related, the transaction price was examined by GATT Valuation Cell of the Mumbai Customs. The assessing officer, after examining the transaction price came to the conclusion that the discount of 35% from the list price of the foreign supplier given to the appellant was in accordance with the trade practice obtaining earlier in respect of unrelated importers and, therefore, he held that the relationship has not influenced the transaction price and accordingly ordered for accepting the transaction price.
Aggrieved, the Revenue filed an appeal and the lower appellate authority observed that after the appointment of the appellant as distributor, the unrelated buyers were no longer getting 35% of the discount from the list price and, therefore, it is a discriminatory discount, which was given only to the appellants and such discriminatory discount is not acceptable and, therefore, it should be added to the transaction price to arrive
at the assessable value.
Hence, the appellant is before the CESTAT.
The Bench observed -
"6.1 The purpose of appointing a distributor is to sell the goods within the specified territory. Therefore, it is obvious that there will not be sales to unrelated buyers. If the goods are supplied to others, then the purpose of appointing a distributor itself will be defeated. The unrelated importers were getting a discount of 35% earlier. It, therefore, logically follows that after the appointment of distributor, he would also eligible for the same discount earlier given to unrelated distributors. The assessing officer has come to the conclusion that 35% discount from the price list given to the appellant is a normal trade discount and it is not a discriminatory discount available only to the appellant distributor. We find merit in the logic adopted by the assessing officer. If an unrelated buyer is eligible for discount, we do not find any reason for denying the same benefit to the distributor. Grant of territorial commission/discount, by no stretch of imagination, can be said to be arbitrary/or discriminatory; it does not affect the normal trade discount given to buyers in any way. Therefore, we do not find any merit or logic in the conclusions drawn by the lower appellate authority. Accordingly, we set aside the impugned order and restore the order the order passed by the adjudicating authority…."
In fine, the appeal was allowed.
MUMBAI, JULY 09, 2013: THE appellant are importers of office automation equipment from M/s Autonics Corporation, Korea. Since both the supplier and importer are related, the transaction price was examined by GATT Valuation Cell of the Mumbai Customs. The assessing officer, after examining the transaction price came to the conclusion that the discount of 35% from the list price of the foreign supplier given to the appellant was in accordance with the trade practice obtaining earlier in respect of unrelated importers and, therefore, he held that the relationship has not influenced the transaction price and accordingly ordered for accepting the transaction price.
Aggrieved, the Revenue filed an appeal and the lower appellate authority observed that after the appointment of the appellant as distributor, the unrelated buyers were no longer getting 35% of the discount from the list price and, therefore, it is a discriminatory discount, which was given only to the appellants and such discriminatory discount is not acceptable and, therefore, it should be added to the transaction price to arrive
at the assessable value.
Hence, the appellant is before the CESTAT.
The Bench observed -
"6.1 The purpose of appointing a distributor is to sell the goods within the specified territory. Therefore, it is obvious that there will not be sales to unrelated buyers. If the goods are supplied to others, then the purpose of appointing a distributor itself will be defeated. The unrelated importers were getting a discount of 35% earlier. It, therefore, logically follows that after the appointment of distributor, he would also eligible for the same discount earlier given to unrelated distributors. The assessing officer has come to the conclusion that 35% discount from the price list given to the appellant is a normal trade discount and it is not a discriminatory discount available only to the appellant distributor. We find merit in the logic adopted by the assessing officer. If an unrelated buyer is eligible for discount, we do not find any reason for denying the same benefit to the distributor. Grant of territorial commission/discount, by no stretch of imagination, can be said to be arbitrary/or discriminatory; it does not affect the normal trade discount given to buyers in any way. Therefore, we do not find any merit or logic in the conclusions drawn by the lower appellate authority. Accordingly, we set aside the impugned order and restore the order the order passed by the adjudicating authority…."
In fine, the appeal was allowed.
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